Can I Get a Business Loan With a Low Credit Score?
Credit score sets the menu, not the verdict. Here is what each band can realistically get, what it costs, and how to move up one tier in about 90 days.
Oct 14, 2026Read
Equipment financing is the most approachable form of business borrowing, because the thing you are buying secures the loan. That changes everything about qualification: lenders care about the asset and your deposits more than your balance sheet. This guide covers 2026 pricing, loan versus lease, what you need to qualify, and how to compare quotes properly.
How it works
A lender pays your vendor for the equipment. You repay in fixed monthly instalments over two to seven years, and the equipment itself is the collateral. Because the loan is secured, approval rates are higher and documentation is lighter than for unsecured funding — for smaller amounts, often just an application and bank statements.
Eligible equipment is broad: vehicles and trailers, construction and agricultural machinery, CNC and manufacturing equipment, commercial kitchens, medical and dental equipment, IT hardware, HVAC, and more. Soft costs such as delivery, installation and training can often be rolled in.
What it costs in 2026
Pricing is driven mainly by the owner's personal credit, then by the asset and the term.
| Credit score | Typical APR | Terms | Down payment |
|---|---|---|---|
| 700+ | 6–14% | 3–7 years | 0–10% new, 10–25% used |
| 650–699 | 12–18% | 3–5 years | 10–25% |
| 620–649 | 12–20% | 3–5 years | 15–25% |
| 580–619 | 18–22% | 3–4 years | 20–30% |
Used equipment typically prices one to three points above new for the same borrower. As a reference point, $100,000 over 48 months runs roughly $2,349–$2,733 a month at 700+ credit, and $2,937–$3,151 at 580–619.
Loan or lease?
| Equipment loan | $1 buyout lease | Fair market value lease | |
|---|---|---|---|
| Ownership | Yours from day one | Yours for $1 at the end | Option to buy at market value |
| Monthly cost | Lowest with a down payment | Slightly higher | Lowest monthly, highest total |
| Best for | Long-life assets you will keep | Assets you will keep, minimal down payment | Technology that dates quickly |
On a $100,000 asset over 60 months at around 9%, a loan with 10% down costs roughly $1,868 a month and about $122,000 in total; a $1 buyout lease about $2,076 a month and $124,500; an FMV lease about $1,877 a month but closer to $127,600 once you buy it out. Lease quotes are often expressed as "rate factors" — always ask for the implied interest rate before comparing.
What you need to qualify
- Credit: 600+ for mainstream programmes; some specialist lenders go to about 575 with a larger down payment.
- Time in business: one year or more. Start-ups can qualify with strong personal credit and a bigger deposit.
- Revenue: roughly $15,000 a month and up.
- Deal size: many programmes start around $25,000.
- Documents: a vendor quote for the specific equipment, business licence and EIN, and three to six months of business bank statements. Application-only approvals are common under about $75,000; tax returns are usually requested above $150,000, and personal returns plus a balance sheet above $500,000.
How fast it funds
- Under $250,000 with complete documents: 24–72 hours.
- $250,000–$1 million: 3–7 business days.
- Over $1 million: 7–21 business days.
The vendor quote is usually the bottleneck. Get it before you apply.
The tax angle
For the 2026 tax year, the Section 179 deduction limit is $2,560,000, phasing out once qualifying property placed in service exceeds $4,090,000, with a separate $32,000 limit for certain SUVs. Bonus depreciation at 100% is available for qualifying property acquired and placed in service under current rules. Financed equipment can still qualify, which is why a December purchase with a January first payment is a common move.
Deduction limits cannot exceed business income and eligibility rules apply — this is general information, not tax advice. Confirm with your accountant before timing a purchase around it.
How to compare quotes properly
- Ask for the total of payments, not just the monthly figure.
- Ask for the implied APR on any lease quoted as a rate factor.
- Check documentation and origination fees, usually $150–$500 but occasionally much more.
- Ask about advance payments — "first and last" at signing changes the real cost.
- Check prepayment terms. Many equipment contracts require full payment of remaining instalments, with no interest saved.
- Confirm what happens at the end: title transfer, buyout amount, or return conditions.
Frequently asked questions
Can I finance used equipment from a private seller?
Often yes, though lenders usually want an invoice, an inspection or appraisal, and clear title. Expect slightly higher rates and more down payment than for a dealer purchase.
Does equipment financing require a personal guarantee?
For most small business deals, yes. Larger, well-capitalised companies can sometimes get corporate-only approval.
Will it affect my ability to borrow elsewhere?
The lender files a UCC lien on the financed equipment specifically, which is far less restrictive than a blanket lien on all business assets. Check which one you are signing.
Is equipment financing better than using a line of credit?
Usually, for a long-life asset. The rate is lower, the term matches the asset's life, and it leaves your line of credit free for working capital.
Rates and tax figures reflect data published as of October 2026 and vary by lender, asset and state.
Negotiating the quote
Equipment finance pricing has more room in it than most owners assume, because the lender's cost of funds, the dealer relationship and the term all move independently. Things worth asking for:
- A shorter term at the same payment. Dropping 60 months to 48 at a slightly better rate often costs little monthly and saves thousands in total.
- Waived or reduced documentation fee. Commonly $150–$500, and frequently negotiable on larger deals.
- No advance payments. "First and last due at signing" quietly raises your effective cost.
- A 60- or 90-day deferred first payment when the equipment needs installation or a ramp-up period before it earns.
- Seasonal or step payments if your revenue is lumpy — many lenders will structure lower payments in your quiet months.
- The implied rate on any lease, in writing, so you can compare it with a loan quote.
Five mistakes that cost real money
- Financing a long-life machine on a short-term product. An advance repaid in eight months against a machine that lasts ten years is a cash flow problem by design.
- Ignoring the end-of-lease terms. FMV leases can carry return conditions, restoration costs and automatic renewals if you miss the notice window.
- Letting the vendor pick the lender without comparing. Vendor finance is convenient and sometimes subsidised, but it is not automatically the cheapest.
- Buying more machine than the contract requires. Capacity you have not sold is just a payment.
- Forgetting insurance and installation in the budget. Lenders require coverage before funding, and installation can run 10–15% of the asset cost.
Refinancing equipment you already own
If you bought equipment with cash or have paid most of a facility down, a sale-leaseback or equipment refinance can release that value as working capital, usually at far better pricing than unsecured funding. Lenders typically advance 50–70% of the asset's current value and want clear title plus an appraisal. It is a sensible route for an asset-heavy business that needs cash without taking on a daily-remittance product.
Was this helpful?
